Health Matters in Social Security Disability Insurance Participation: Panel Study of Income Dynamics

Zagdbazar, Manlaibaatar and Bayarjargal, Munk (2025): Health Matters in Social Security Disability Insurance Participation: Panel Study of Income Dynamics.

Abstract

This paper investigates the independent roles of health deterioration and employment status in determining future enrollment in Social Security Disability Insurance (SSDI). Using longitudinal data from the Panel Study of Income Dynamics (PSID, 2005–2019), this research introduces the frailty index—an objective health measure that aggregates cumulative deficits across physical, cognitive, and social dimensions—to overcome limitations associated with self-reported health metrics. Employing a fixed-effects panel regression model, the analysis reveals that higher frailty scores significantly increase the likelihood of transitioning to SSDI within two years. Employment status further modulates this effect, with temporarily disabled, laid-off, and individuals keeping house exhibiting heightened vulnerability due to pre-existing health impairments and economic instability. Subgroup analyses indicate substantial variation in effects by education, gender, and race, underscoring the interplay between health status, employment vulnerability, and systemic inequalities. Robustness checks confirm the consistency of these findings. These results highlight the necessity of targeted early-intervention health strategies and policies addressing employment instability to mitigate premature reliance on disability benefits.

• Item Type: MPRA Paper
• Language: English
• Keywords: Social Security Disability Insurance; Frailty Index; Employment Status; Panel Data; Health Inequality
• Subjects: I - Health, Education, and Welfare > I0 - General; I - Health, Education, and Welfare > I0 - General > I00 - General; I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy ; Regulation ; Public Health; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I28 - Government Policy; J - Labor and Demographic Economics > J1 - Demographic Economics > J14 - Economics of the Elderly ; Economics of the Handicapped ; Non-Labor Market Discrimination

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